The Wine Collector

I'm pleased to announce that Vinfolio has raised $4.5mm in a series A preferred stock investment led by Panorama Capital (see press release). We're thrilled to become one of a handful of venture-backed businesses in the wine industry in what is a very difficult fund-raising environment.  The enormous potential of Vinfolio's Marketplace to create a new supply channel for fine wine drove the investment decision along with Vinfolio's Asian expansion opportunity.

This brings the total equity capital investment in Vinfolio to approximately $14 million.  The first $9.5 million came from a combination of initial funds I provided and two rounds of outside investment from individuals.  So while this is a Series A round, it is not a typical one given the amount of prior investment.

The good news for wine collectors and enthusiasts is that the additional financial resources enable us to continue our ambitious development plans on multiple fronts.  We're all looking forward to focusing our full energies on the business once again.

Wine & Spirits' Fall 2009 issue contains a full page story titled New Market: The online confluence of CellarTracker and Vinfolio.  It's a well-written summary of our Marketplace model and the logic behind why partnering with CellarTracker made sense for both parties.

Speaking of Marketplace, just today we released a range of new features which will be described in a series of blog posts on the Vinfolio Blog soon.

Bloomberg's Elin McCoy just published her article, Wine 'Spot Market" Puts Collectors, 12 Million Bottles Online, about Vinfolio's Marketplace.  I'm not sure there's much to add as she did a great job distilling the Marketplace into a concise story.  As of first thing this morning, it was already the #5 most emailed story on Bloomberg in Asia -- and that includes among all financial and political stories.

A few important points to clarify:

1. Marketplace goes live on July 7 - Since I started talking to Elin a few weeks ago, we've move the commencement date for "going live" to July 7 from July 1 to push it until after the 4th of July weekend.  UPDATE: I forgot to mention that interested sellers can start marking their wine for sale now to prepare for live bidding.  Here's how.
2. International expansion of Marketplace - There's no question that the Marketplace is applicable in both Europe and Asia but we need to "walk before we run."  The reference to "end of year" for the UK is clearly ambitious and not likely unless we partner with someone.  In Asia, my comment about the market not yet being ready simply recognizes the reality that regional collector-owned wine supply drives the Marketplace.  That will develop in Asia over time given the pace of buying and the emergence of more local wine storage options created by the elimination of Hong Kong wine duties last year, but virtually all supply being sold in Hong Kong wine auctions today is coming from the U.S. and Europe.

VinTank just released its 85-page report on the state of Wine Industry Social Media (download the PDF).  I'm pleased to report that VinTank rated Vinfolio's VinCellar offering the highest on its Innovation metric and second on its Value metric in their "Impression Chart" for wine social media networks below (also on page 23 of their report).  For VinTank's detailed comments on VinCellar, start reading on page 46 of the report.

There's more innovation to come and expect a major announcement in approximately two weeks.

The 2009 American Wine Blog Award Winners were announced yesterday.  For the third year in a row, I'm pleased to report that The Wine Collector won an award (the same as last year's: Best Business Blog).  When asked by a reporter yesterday for my thoughts on what the award means to me, my response was "It's always a pleasure to have one's efforts recognized and it helps provide me with further inspiration and impetus to increase the frequency of my posts." Thanks for your support.

Tom Wark at Fermentation kicked off this awards program in 2007 and is passing the baton to the Open Wine Consortium to administer next year.  Tom's blog is one of my personal favorites and his ability to communicate ideas is unparalleled (which I guess is why he's in the PR business).  Next year he'll become a contender for these awards for the first time and I predict will win one or more categories.

Alder Yarrow at Vinography repeated his winning performance of last year and, in his usual thorough way, has outlined a series of suggestions for what he would change next year. The OWC should listen as it's a good, logical list of improvements.

Thanks again for your support and always feel free to suggest a topic to me (see upper left link on my blog page).  My "day job" at Vinfolio is keeping me busier than ever but I'll try to address suggestions if possible and consistent with the blog's focus.  You can also follow me on Twitter (@Vinfolio) which I use to post "micro comments" or to provide links to articles of relevance.

I'm pleased to report that The Wine Collector was named as one of the four finalists in the 2009 American Wine Blog Awards in the category of Best Business/Industry Wine Blog.  This blog won this category last year and another category in the 2007 debut year of the awards.  See all finalists in all 7 categories.

Winners are determined by voting from the public as well as from a panel of judges.

If you enjoy this blog, please take a minute to vote for The Wine Collector on question 5 prior to midnight on Wednesday, March 4, 2009.

CLICK HERE TO VOTE.

You need not vote on all categories to submit a response (and you can only vote once!).  But I would encourage you to check out all of the blogs as they deserve your readership.

Thanks for your support.

P.S. You should also subscribe to the new Vinfolio Blog whose content has been repurposed going forward (since February 13).

(Updated 2/8/09 for last story)

Both the San Francisco Chronicle and Bloomberg.com ran articles on the fine wine market in recent days in wihich Vinfolio was quoted.  Here are links:

• San Francisco Chronicle: "Suddenly, those rare wines aren't so rare"
• Bloomberg.com:"With Lafite 45% off, it's time for wine vultures"

I thought it might be useful to provide a recap on Vinfolio's progress in 2008 towards our overarching goal of providing "Fine wine, Finer service" to our customers/users and a perspective on what we expect to accomplish in 2009.  If you're not a customer or user of our software/websites, hopefully this will inspire you to become one.

Vinfolio's 2008 Achievements

1. 2008 revenues grew about 50% over 2007, despite the negative impact of the economic crisis.  We were named the 4th fastest growing private company in the Bay Area by the San Francisco Business Times.
2. Over 75% (by value) of the wine sold by Vinfolio in 2008 was sourced from private cellars.
3. Our organization reached over 50 employees plus approximately a dozen full-time development resources in India (with our outsourcing partner).  Approximately a third of total employees and contractors are working in software development (maybe 4x over the end of 2007).
4. A completely new (and still free) VinCellar, version 3.0, was released in July 2008 after 18 months of design and development.  We continue to enhance the application with updates every 45-60 days.
5. Registered users reached over 43,000 by year end.  All but 2,000-2,500 of which occurred since we moved to a free usage model in September 2006 in lieu of our prior membership-based (paid) model.
6. We further enhanced our already strong wine purchase-related guarantees with a new Price Match Guarantee.
7. Our buying tools were expanded with a powerful wine alerts service that sends email notifications when wines matching saved search criteria hit Vinfolio's inventory.  This capability complimented our pre-existing RSS feeds.
8. We launched several new collector services including Personal Cellar Manager and a Wine Investment Service.
9. A new free website, WinePrices.com, was launched in October 2008 to provide comprehensive retail and auciton price data for wine (see press release).  A new iPhone application for this site will be launched in January 2009.
10. A new Vinfolio Hong Kong operation was formed and staffed. See our new Hong Kong site (www.vinfolio.hk).
11. A second U.S. warehouse was opened in November 2008 in Napa to accommodate growth and streamline operations.  Accompanying this, we added a second delivery van in the Bay Area and expanded Will Call hours in San Francisco to 8 pm Monday-Friday.
12. A warehouse management system was implemented to facilitate more efficient operations and smoother fulfillment of orders.

Vinfolio's 2009 Goals

I'm excited about 2009 as changing markets create opportunities.  This is a representative list of some key objectives with the first and second being our top priorities.

1. The Company and a majority of our software development resources are highly focused on a major new initiative that will transform how fine wine is bought and sold (for both individuals and the trade).  We are targeting a July 2009 launch and are more than 50% of the way through development.
2. The bulk of the remaining technical resources (which we expect to further expand in the coming months) will develop further enhancements to VinCellar.  Our highest priorities are community-related and social networking features (including more blogger support, further integration with Facebook, adding Twitter integration, and potentially other social networking platforms).  Want a say in our plans?  Post your comments and requests in Vinfolio's Forums.
3. Introduce money-making affiliate programs for bloggers and other third parties.
   
4. Improve our site responsiveness and scalability of our server infrastructure.
   
5. Innovate more in our wine marketing and merchandising programs such as our new 1-cent ground shipping offer.
6. Overhaul our ecommerce checkout process to improve ease of use and launch a Hong Kong ecommerce site.
7. Add mobile phone-based checkout capability.
8. Introduce a major new co-marketing program with Napa/Sonoma wineries.
9. Open our Hong Kong wine storage facility in Q1 2009 and, later in 2009, begin selling wine from inventory held in Hong Kong.
10. Secure additional corporate partnerships with complementary businesses.  We are in discussions on four such partnerships currently that will impact 2009, one of which has already been signed.
11. Get more customer feedback!  We'll be stepping up our surveying of customers but don't wait to be asked.  Post any product or site suggestions in our forums and feel free to email me at steve@vinfolio.com or to send a direct message to me via Twitter (@Vinfolio).

Thanks

To customers and current software/site users, thanks for your patronage and support.  We want you to be so satisfied that you can't resist telling your friends about Vinfolio (if we haven't reached that level with you, I'd love to hear why not and what else we might do).

If you're not a current customer or user, visit our sites (www.vinfolio.com, www.vincellar.com, www.wineprices.com, and www.vinfolio.hk) and register (it's free) for additional benefits.  Your registered email and password will then work on all sites.

For the past week or so, I have been experimenting with Twitter.  Frankly, I originally dismissed this method for communicating and staying connected with others because it sounded like a messaging version of reality TV.  But I became intrigued by a post on Guy Kawasaki's excellent How to Change the World blog called How to use Twitter as a Twool.  This article had the same motivating effect on me that reading Robert Scoble's Naked Conversations: How Blogs are Changing the Way Businesses Talk to Customers.  In the latter case, after reading the book, I decided to launch this blog. 

One way of viewing Twitter is as a "micro blogging" platform for those thoughts and ideas one comes across that don't necessarily rise to the level of writing a full blog post.  More broadly, Twitter helps businesses monitor the real-time "chatter" about your business and its competitors while even providing unique ways of providing customer service (e.g., see JetBlue uses Twitter - Listens to Customers, Grabs New Business).

You're going be reading more about Twitter as this social networking platform proliferates and is adopted by more businesses in innovative ways.  Sign up and see what you think.  While you're at it, make sure you "follow" Vinfolio on Twitter (I've been slow out of the gates in "tweeting" but will be stepping up my activity after the holidays).  Vinfolio will also be introducing other Twitter accounts soon to enable more active customer interactions

The San Francisco Business Times compiles an annual list of the Bay Area's 100 fastest growing companies and Vinfolio was ranked #4 based on 2005 to 2007 revenue growth of over 700%.  We were #5 in last year's ranking.  Read our press release and the associated article titled Vinfolio tracks wine for finicky oenophiles. 

Reuters just published a story titled Wine collectors eye cellars for liquidity in which Vinfolio is prominently featured. In fact, over 70% of the wine we sell (by value) is sourced from private collections because that's where most of it is -- not in the trade channels.  We are, in effect, systematically creating a new supply channel for fine wine by aggregating the "long tail" of supply.

The 2008 American Wine Blog Award Winners were announced today and I'm pleased to report The Wine Collector won in the category of Best Wine Business Blog.  Thanks for your support.

When I started writing this blog in 2006 (see Launch of The Wine Collector), I did not foresee writing as much about wine business issues as I have done.  However, wine collecting is all about buying fine wine and the context in which one does that is fundamentally affected by a whole range of business factors affecting retailing trends, global demand, regulatory changes with shipping and foreign duties, wine authentication, investment trends, and more.

I look forward to continuing to write on issues facing wine collectors and the wine business.  The process of thinking through a blog topic is actually quite helpful to my "day job" running Vinfolio and one I thoroughly enjoy doing.   Should you have topics to suggest for The Wine Collector, please feel to email me at steve@vinfolio.com. 

Vinfolio is taking immediate steps to launch its first international operations in Hong Kong by Fall 2008.  See today's press release.  Here are a few factors which drove the decision:

• The demand for fine wine has been growing steadily in the region and we expect it to continue.
• The recent elimination of wine duties in Hong Kong provided a further catalyst and, over time, will create pressure for other countries to cut duties, too.
  
• Hong Kong offers an attractive business environment and excellent location from which to serve neighboring geographies, especially mainland China.
• The weak U.S. dollar is stimulating more Asian buyers to focus on the U.S. market to buy their fine wine.
  
• Additional wine storage services are needed to support the arrival of wine historically stored outside Hong Kong.  Vinfolio's experience in running a full-service storage facility in San Francisco combined with our VinCellar online cellar management software create competitive differentiation for our services.

Next steps

I will be in Hong Kong again from April 8-11 to begin exploring warehouse and office locations.  In addition, we'll start searching for a Managing Director/General Manager hire.

Bottom line: The fine wine business is global and Vinfolio's operations need to mirror the market to maximize our opportunities.  This is no doubt only the first step in the globalization of our business.

I'm pleased to report that The Wine Collector blog was just named as one of four finalists in the following two categories of the 2008 American Wine Blog Awards (see all finalists):

• Best Single Subject Wine Blog
• Best Wine Business Blog

Last year, this blog won the first category.  The second category is new but fits closely with many of the topics I cover.

If you enjoy this blog, please take a minute to vote for it in both categories (questions 2 and 7 on the 8-question ballot).

CLICK HERE TO VOTE.

Note that voting starts today, March 21, and runs through midnight (PST) on Friday, March 28th, so don't delay.  You can only vote once.

I would encourage you to check out all of the blogs and vote in other categories as they are all worth reading regularly.

Thanks for your support. 

Last week, Vinfolio issued a press release announcing our new Personal cellar manager service which enables you to hire a one of our wine experts to manage your wine collection on a "fractional" basis (a fixed number of days per month).

Why we launched the service

This service is a logical extension of our inventorying services and VinCellar software to enable busy wine collectors get the most out of their collection.  Many people with larger wine collections don't have the time to manage them properly.  Your personal cellar manager is at your disposal to perform whatever wine-related task you desire, for example:

• Visiting your home anywhere in the country to reorganize your cellar
• Creating reports on your cellar holdings
  
• Generating recommendations on which wines to cull for sale or to buy from new releases
• Providing pairings and recommendations for entertaining

We're running an introductory special on pricing through March 31, 2008.  Check out the fee schedule and call to learn more.

P.S.    Image above is a Paul Wyatt-designed cellar.

Tomorrow night, Vinfolio and one or two of our customers will be profiled on the next edition of CNBC's High Net Worth Show.  Check it out or set you DVR to record it.  Here are the showtimes (all EST) and a quick description of the show's contents from the CNBC website.

About the Show

Tomorrow's Washington Post includes a story on wine investing called Buyers and Cellars (including a few quotes from me).  There's no question that investing in wine is a topic of growing interest.  The story mentions this blog and some wine investing tips which are part of a prior post (click here to read all of the tips).  The story also references wine's investment performance relative to other categories, the details of which may be found in this post from last week.

For the past year, Vinfolio has been working on an all new, dramatically enhanced version of VinCellar, our free online cellar management software which we estimate will launch in early 2008.  View demo.

Why we made a substantial investment

As good as the current VinCellar is, there's always room for improvement.  With feedback from our users on desired features and new Web technologies available to enhance the user experience, we decided in late 2006 to overhaul VinCellar.  Our goal is to make it the compelling choice amongst cellar management software alternatives.  Best of all, it will remain free!

New features

• Community tasting notes - You can already create personal tasting notes but you will now be able to share them in a myriad of ways including on a dedicated VinCellar website, through Facebook, and via a new format we call "Wineposts".  We'll even pay you (in the form of wine credits in our store) to submit your personal tasting notes prior to the official launch.  Learn how to participate.
• Reorganization of tasks by individual wine - The redesign enables us to pull tasks related to given wine (such as Add, Remove, Move, Sell) into a single page while preserving your ability to build lists of wines for acting upon as a group.
• Valuation data - We will continue to have all wine auction price data from the Wine Price File plus licensed retail price data  to enable you to monitor the changing value of your collection.  With VinCellar 3.0, we will be upgrading our capabilities in the retail pricing area.
• Cellar analysis tools - Our current graphical reporting capabilities will be taken to a whole new level.
• Visual browsing of your cellar using a special "label view."
• Integrated third party content and links - VinCellar already offers about 100,000 professional reviews which Vinfolio has licensed and there is more to come.  We're also building in links to other frequently used wine reference sites.
• Buying and selling made easy - You'll be able to easily know when Vinfolio has wine in stock which is relevant to your interests and also be able to sell anything from individual bottles to your entire collection through a new format of an auction mechanism we've created.  (This functionality has already been designed but will be rolled out in a second phase).
• Robust reporting, including printing in a restaurant wine list format.

There's a lot more and we actively want your feedback once the beta version launches (visit our new VinCellar 3.0 topic in on our Vinfolio forums page).  As a Web-based application, we'll be rolling out updates on a continuous basis.

Bottom line:  By integrating comprehensive cellar management capabilities with community and professional content, and combining it with social networking standards such as Facebook and Vinfolio's ecommerce capabilities, you'll finally be able to satisfy your wine-related needs in one place.

Town & Country magazine's January 2008 issue titled "Luxury Redefined" has a short article on Vinfolio called A Cellar's Market describing our on-site inventorying services.  Beyond the reasons quoted by our customer in the article, here's a short post from last December titled Reasons to update/create your wine cellar inventory.

For those interested in tapping an even higher level of service, we are currently beta testing a new Personal Cellar Manager service offering in the Bay Area.  If you'd like the benefit of a dedicated wine expert to assist with all aspects of your wine collection but for only a few days a month, then give us a call (even if you live outside the Bay Area).

The Entrepreneur Profile in the latest issue of the San Francisco Business Times published today is about yours truly.  If you want to know what I think are Vinfolio's biggest strengths and weaknesses as well as what my favorite book is, check it out.

P.S.    See my other recent post on another San Francisco Business Times story, Vinfolio ranked 5th fastest-growing Bay Area company.

While I was away on my annual ski vacation last week, I was notified that this blog won a 2007 American Wine Blogs Award for the category of Best Single Subject Blog.  Thanks for your support and I hope to continue delivering interesting content to you in 2007.  Here's a list of the winners in all categories and the original list of finalists.

If you have topics to suggest for The Wine Collector, please feel free to submit them using the "Suggest a topic" link under my photo.  I can't guarantee I'll address your suggestion in the blog but would be glad to consider all ideas.